What is retained earnings of a company. We share last year's profits correctly

Undestributed profits(NP) - common accounting concept faced by many businesses. This term stands for funds received from economic activity firms and available at its disposal after the payment of tax deductions, dividends, fines, etc. In other words, all mandatory payments.

An alternative name for retained earnings is a retained surplus of funds. AT individual cases the concept of "profit retention ratio" is used.

The main difference between retained earnings and net profit is that it is always calculated not only for a specific period, but also for the total life of the enterprise. Whereas net profit is determined only for reporting period. But at the end of the year, which is logical, both indicators can be the same.

Retained earnings in the balance sheet refers to the passive part of the funds. By default, it is considered that it must be distributed among the owners and used to optimize the company's business model. Up to this point, such profits can only be called the debt of the company in relation to its owners. Refers to long term sources funding, so the goal financial strategy the company should be its mandatory accumulation.

What to do with retained earnings

There are several main ways to send an IR. Among them:

• payment of dividends to owners/shareholders;
• compensation for earlier losses;
• accumulation of funds reserve fund;
• other goals agreed by the leaders.

IMPORTANT! As for the last point, it is worth making a small clarification. In this case, managers are not meant to be nominal officials, but business owners. As a rule, they resolve such issues during the final annual meeting, at which the relevant protocol is drawn up.

What determines the amount of retained earnings

In different reporting periods, the indicator may differ. It is influenced by things like:

• the amount of dividends paid to the owners of the company;
• the change net profit;
• increase or decrease in the value of commodity assets;
• change in overhead costs;
• revision of tax rates;
• change in the company's business strategy.

Undestributed profits. Check

All NP for the past years is summarized on account 84, the balance credit balance will be placed in line 1370 of the balance sheet. The same line contains the amount of uncovered loss (if any), which is indicated in brackets. Uncovered loss is the difference between the expenses and income of the company during the year, according to which the first point exceeds the second.

The invoice contains information about the face value and the change in the amount for reporting year. At the end of the year, the amount is credited to account 84, while the loss is debited. The main task of this account is to store information about the purpose for which the funds were used.

An uncovered loss is sometimes called a deficit profit. You can compensate for the loss in whole or in part with the help of reserve capital. In the case of compensation, data on the initial loss is not filled in (in case of partial compensation, only the remaining amount of the loss is indicated in brackets).

IMPORTANT! At the request of the accounting department, to distinguish between figures for the reporting and previous years, additional lines can be written in the balance sheet - 1371 and 1372.

Calculation of retained earnings. Detailed Formula

So, we found out that retained earnings are the amount of funds remaining at the disposal of the owners of the company after all tax and other mandatory deductions. This indicator can be calculated using the formula:

HPk \u003d HPN + PE - D

• PE - net profit minus income tax;

Note: The standard reporting period is a year.

If for current period the firm received a net loss instead of profit, the formula takes on a slightly different form:

NPk \u003d NPn - CHU - D

• HPK - surplus of funds at the end of the reporting period;
• HPn - the same indicator at the beginning of the period;
• BC - net loss;
• D - dividends distributed over the reporting period, based on the NP of the previous periods.

The remaining indicators are similar to the previous formula.

Keep a balance. Rational allocation of NP funds

It is believed that business scaling should be a priority goal when determining where retained earnings will go. Competent reinvestment can increase the overall profitability of the business and the exchange value of its shares. Which, in turn, will be the main advantage for investors. The banal payment of dividends is good only in the short term, while progressive development creates the potential for stable long-term earnings. If the company does not grow, investors will not see this potential and will want to increase dividends now, which is undesirable from a financial point of view for the company itself.

On the other hand, even taking into account the logic of the above, discussions often arise between the management and the management department of the enterprise as to where to direct retained earnings.

If management is opposed to allocating funds for the payment of dividends, but wants to use them exclusively for the implementation of new projects, shareholders may decide to sell shares.

As a result, the company's stock quotes will decline, as will its market capitalization.

Therefore, for financial management it is important to adhere to the so-called golden mean, providing investors with the return they expect, and at the same time directing funds for the development of the company.

Investments from the amount of retained earnings are often directed to the purchase of new equipment, marketing research, technology improvement and other items on which further competitiveness and financial success business.

• Purpose of the article: reflection of information on undistributed financial result current year and past years.
• Line in the balance sheet: 1370.
• Numbers of accounts included in the line: account balance 84 (debit or credit).

At the end of the year, at the general meeting of shareholders of the company or the founders of the organization, a decision is made on the distribution of the company's net profit. The part of the financial result that was not distributed among the participants is recognized as retained earnings of the current year. If the financial result is negative, information about the uncovered loss of the company appears.

In a company's accounting, retained earnings or uncovered loss fixed on account 84. It displays unallocated funds separately for different sub-accounts. financial results current year and previous periods.

Note from the author! Account 84 is active-passive, so there may be a debit balance (the amount of outstanding loss) and credit balance(the amount of retained earnings), depending on the performance of the company.

Line 1370 balance financial statements refers to the Capital and reserves section of the passive part of the balance sheet: it reflects the company's own capital in terms of retained earnings. Information for all years is summarized and displayed in one line. Also, this line records information on losses uncovered by the relevant sources of financing for the current year and previous periods.

Line 1370 - part of the net profit not spent on the needs of the organization.

Note from the author! In accounting, net profit is understood as the final positive financial result of the company's activities, which remains after the repayment of all obligations in terms of paying mandatory taxes, fees, and insurance contributions to the budget.

According to the rules of conduct accounting, the financial result of the enterprise is displayed in Kt99. At the end of the year, a balance sheet reform procedure is carried out (closing of all main accounting accounts). One of the results of this procedure is the transfer of the balance from Kt99 to Dt84 in terms of undistributed income of this period.

Retained earnings can be spent on the following needs:

• payment of dividends to shareholders or founders of the company;
• increase in the size of the authorized capital of the company (after the official registration of changes in the constituent documentation);
• creating reserves: transferring part of retained earnings to the company's reserve capital;
• repayment of losses of previous years.

Note! During the year, there can be no movements on Dt84 without the decision of the founders of the company.

Uncovered loss

Losses as a result of the activities of the organization may be formed in the following cases:

• the costs of the company exceed the income received both from the main activity and from operations not related to the main financial and economic activity;
• significant errors of previous reporting periods were identified;
• made adjustments to the company's accounting policies.

Line 1370 balance sheet- reflection of losses that were not covered by possible sources of financing. Data for past periods and the current year are summarized.

Sources of loss coverage:

• means of the statutory fund: bringing the value of the statutory fund to net assets firms. Decrease authorized capital must be carried out within the limits established by law (the minimum threshold for public JSCs is 100 thousand rubles, for non-public JSCs and LLCs - 10 thousand rubles).

  Retained earnings - where can they be used and who makes the decision?

• means of the company's reserve fund;
• targeted investment by the founders of the organization (contributions of the company's owners that do not affect the distribution of shares and the amount of the authorized capital);
• retained earnings of previous years.

Regulatory regulation

The use of account 84 to generate information on the presence of undistributed profit of the company at the end of the year (occurrence of uncovered loss) is carried out in accordance with the Chart of Accounts and other regulatory documents.

Practical examples of accounting for retained earnings (uncovered loss)

Example 1

In 2017, the proceeds from the sale of goods of Solnyshko LLC amounted to 2 million rubles (excluding VAT). The cost of goods that were sold amounted to 1 million rubles (purchase from suppliers, transportation, etc.). Other expenses of the company - 70 thousand rubles.

Business operations

930 thousand rubles - net profit of LLC.

From the final financial result of the company, income tax was paid to the budget.

186 thousand rubles - settlements with the Federal Tax Service of Russia.

After the balance sheet reformation procedure, the following posting was made

744 thousand rubles - displayed retained earnings of the company.

In the balance sheet of Solnyshko LLC at the end of 2017, in line 1370 there will be an amount of 744 thousand rubles.

Example 2

As a result of the analysis of the financial and economic activities of the company "YAR", a loss was identified based on the results of activities in 2017. The loss as of 01/01/2018 amounted to 40 thousand rubles. The founders of the company decided to cover the loss at the expense of their own targeted financing.

Business operations

15 thousand rubles - cash deposit by the founders.

25 thousand rubles - transfer by the founders Money to the company account.

40 thousand rubles - the loss was covered by the targeted contributions of the founders.

Common entries in retained earnings (uncovered loss)

1. Balance reform procedure

   Dt99 Kt84 - retained earnings.

   Dt84 Kt99 - identification of uncovered loss.

2. Loss write-off

   Dt84 Kt84 - at the expense of income from previous periods.

   Dt82 Kt84 - means of the authorized capital.

   Dt75 Kt84 - targeted financing of the founders.

   Dt80 Kt84 - bringing the statutory fund to the value of net assets.

Questions and answers on the topic

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Line 1370 "Retained earnings (uncovered loss)"

By line 1370 reflects the amount of retained earnings or uncovered loss of the organization:

Interim reporting:

plus/minus

minus

(in terms of interim dividends accrued in the reporting period)

Annual reporting:

The amount of retained earnings (uncovered loss) of the reporting period is equal to the sum of net profit (net loss) of the reporting period, i.е. profit (loss) after tax. Therefore, if the organization does not have retained earnings (uncovered loss) of previous years and the distribution of interim dividends during the reporting period, then the value of line 1370 coincides with the value of line 2400 “Net profit (loss) of the reporting period” of Form No. 2.

In some cases, the organization is obliged in the interreporting period as of January 1 of the reporting year to make adjustments to balance sheet indicators:

1. Retained earnings (uncovered loss) include the results of revaluation of intangible assets, if:

• the amount of IA depreciation exceeds the amount of its revaluation credited to the additional capital of the organization as a result of the revaluation carried out in previous reporting years;
• intangible assets that have not been underestimated earlier are discounted;
• Intangible assets, which were previously discounted, are revalued and the amount of its writedown carried out in previous reporting years is attributed to retained earnings (uncovered loss) in previous reporting years.

2. The amount of retained earnings (uncovered loss) is adjusted when estimated values Intangible assets (i.e. residual value of intangible assets):

• in case of deadline beneficial use NMA;
• in case of clarification of the method of calculating depreciation for intangible assets.

Retained earnings (uncovered loss)

Retained earnings (uncovered loss) include the results of fixed asset revaluation if:

• the fixed asset object, which was previously discounted, is revalued and the amount of its writedown carried out in previous reporting periods is attributed to retained earnings (uncovered loss) in previous reporting years;
• the amount of the depreciation of the asset exceeds the amount of its revaluation credited to the additional capital of the organization as a result of the revaluation carried out in previous reporting years;
• the OS is depreciated, which was not underestimated earlier.

4. The amount of retained earnings (uncovered loss) is adjusted for changes accounting policy:

• caused by a change in the legislation of the Russian Federation or regulatory acts on accounting (except as otherwise provided by the relevant legislative or regulatory act);
• in other cases, changes in accounting policies.

No adjustment is made to retained earnings if a monetary estimate of the effects of a change in accounting policy for periods prior to the reporting period cannot be made with sufficient reliability.

5. Retained earnings (uncovered loss) include the results of the recalculation of deferred tax assets and liabilities caused by changes in income tax rates in accordance with the legislation of the Russian Federation.

The rest is retained earnings

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The balance of retained earnings is carried forward to next year.  

There may be a balance of retained earnings, which before its distribution is used in the turnover of the enterprise. If the company is unprofitable, then equity is reduced by the amount of losses incurred. Significant specific gravity in the composition internal SOURCES- take depreciation deductions from used own fixed assets and intangible assets. They do not increase equity, but are a means of its reinvestment. Other forms of equity include income from the lease of property, settlements with the founders, etc. They do not play a significant role in the formation of the equity capital of the enterprise.

Retained earnings of previous years shows the balance of retained earnings of previous reporting years.

Under the item Retained earnings of previous years, the balance of retained earnings of previous reporting periods is recorded.

The concept of retained earnings of an enterprise

Under the article: Retained earnings of previous years, the balance of retained earnings of previous years is given.

Line 460 Retained earnings of previous years shows the balance of retained earnings of previous reporting years.

Retained earnings of previous years (88 - 2) reflects the amount of the balance of retained earnings of previous reporting years.

As the results of the calculations show, the value own funds bank for the analyzed period decreased by 2,071,894 rubles, which was mainly due to a decrease in the balance of retained earnings of the bank by more than two times.

When filling in the line, the data of account 88 Retained earnings (uncovered loss), subaccount 88 - 2 Retained earnings (uncovered loss) of previous years are used, the balance of retained earnings of previous reporting years is shown.

Let's assume that general meeting shareholders at the end of the year decided to reinvest 30% of the company's net profit remaining after taxes and formation of funds (according to legislation and charter), 20% of net profit to direct to the payment of dividends on ordinary voting shares, 50% of net profit to leave as a balance retained earnings.

The main source of replenishment of own capital is the profit of the enterprise, due to which accumulation, consumption and reserve funds are created. There may be a balance of retained earnings, which, before its distribution, is used in the turnover of the enterprise, as well as the release additional shares.  

One of the most important subsections of the balance sheet, which analysts first of all pay attention to. According to regulatory documents in the balance sheet, the financial result of the reporting period is reflected as retained earnings (uncovered loss) of the current reporting period, minus those due from profits established in accordance with the law Russian Federation taxes and other similar obligatory payments, including sanctions for non-compliance with taxation rules. The enterprise must reflect in the balance sheet undistributed profit (uncovered loss) of the reporting period accumulated by the main result from the beginning of the year. After the distribution of profit at the end of the year, by decision of the meeting of the owners of the organization, the balance of retained earnings is added to the retained earnings of previous years. In case of a loss, the data on the specified balance lines are given with a minus.

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Retained earnings in the balance sheet (nuances)

All movements with a profit - the formation of the distribution is reflected in the statement of changes in equity

in the income statement, the financial result of the reporting year is calculated

Yes, incrementally, minus paid dividends.

Added after 1 minute 44 seconds:

So you're asking about the balance sheet, or about the income statement?

It agree, without an example the theory is not perceived.

For simplicity, an example where profits were not distributed

Today is December 31, 2009. The company's account 5520 has accumulated profit of previous years (i.e. without profit of 2009) 100,000 tenge (Credit balance, since profit)

In the income and expense accounts balance sheet(very simplified version) we have:
1 Credit balance on account 6010 (Sales income) 500,000 tenge
2 Debit balance on account 7010 (cost products sold) 300 000 tenge
3 Debit balance on account 7210 (Administrative expenses) 50,000 tenge

We draw up a profit and loss statement for 2009 (also a simplified version, without other income, expenses, income tax)

Gross income 200 000 tenge
Total income 150,000 tenge Remember this figure
In accounting, we close the accounts of income and expenses
Dt 5610 Kt 7010 300 000
Dt 5610 Kt 7210 50 000

Account 5610 has a credit balance of 150,000 tenge. We do the wiring

Previous years (Credit balance 5520) 100,000
Reporting year (credit balance 5510) 150,000
Total (total accumulated profit for previous years + 2009 profit) 250,000

You are right that income tax is calculated not from accounting profit, but from taxable profit (and they are extremely rarely equal), of course you understand. Therefore, we believe that the tax will be 30,000, and we calculated this tax not in financial reporting 😀

Profit and loss statement for 2009 already including tax

Sales income 500,000 tenge
Cost of goods sold (300,000) tenge
Gross income 200,000 tenge
Administrative expenses (50,000) tenge
Profit before tax 150,000 tenge
CIT expenses (30,000)
Total income120 000

CIT expenses are reflected in accounting (again for simplicity)

Dt 7710 Kt 3110 30 000

Closing income and expenses:

Dt 6010 Kt 5610 (Total income) 500,000
Dt 5610 Kt 7010 300 000
Dt 5610 Kt 7210 50 000
Dt 5610 Kt 7710 30 000

On account 5610 balance 120 000

We make a transaction for this amount

Dt 5610 Kt 5510 120 000

In the balance sheet as of 01/01/2010 we see

Profit of previous years (Credit balance 5520) 100,000
Reporting year (credit balance 5510) 120,000
Total (total accumulated profit for previous years + 2009 profit) 220,000

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AT modern economy all enterprises exist on funds received from the sale of goods, works or services. But members of the company must also have their own income from the activities of the company. For these purposes, there is a special balance line - retained earnings.

Profit and loss of the company

Any business starts its activity to generate income. Members of the society expect to have additional money, regardless of whether they work in this enterprise or not. Retained earnings on the balance sheet is the remaining income of the firm after payment of all debts to suppliers and employees of the company.

However, when implementing entrepreneurial activity the organization may incur losses, for which the participants of the company are also responsible. tax code allows you to increase clean means shareholders (participants), repayment of uncovered losses is also suitable. The help of shareholders (participants) is vital precisely at the moment when the enterprise incurs losses, since this threatens bankruptcy and liquidation of the enterprise. Therefore, the coverage by the owners of the loss acts as the most frequent case of restoring the value of the net assets of the enterprise.

retained earnings in the capital of the organization

To clarify this aspect, let's turn to the Regulation on Accounting, which regulates the procedure for controlling financial issues in enterprises. In accordance with paragraph 66 of PBU, retained earnings in the balance sheet are the equity of the company. It is formed not at the expense of contributions from participants, but at the expense of the efforts of the enterprise itself, being at the same time a factor in the growth of the welfare of the organization and its owners. In other words, retained earnings are a source of equity not of external, but of internal origin.

The resulting profit can be spent on the distribution of dividends between participants or remain in the enterprise in the form of additional capital, cash or fixed assets for further development of activities and repayment of losses.

What is retained earnings

The "Retained Profit/Loss" account is required to store information about the presence and movement of the amount of this profit or loss of the company on the company's balance sheet.

It should be noted that the source of payment of income tax, tax sanctions is after the formation of the financial result. Retained earnings in the balance sheet is the source of allocations to funds. Wherein we are talking on the use of net income.

When they say that income tax, dividends are paid at the expense of net profit, meaning by the last profit after tax, this is also true. However, accounting clearly separates the formation of net profit during the reporting period and its use with the help of an account for accounting for retained earnings for the statutory purposes of the enterprise.

Disposition of retained earnings

The right to dispose of net profit belongs to the owners of the enterprise, which is reflected in the relevant regulations. The owners of the enterprise have the right to spend retained earnings for various purposes, for example, to encourage employees, charity, to finance social events, cultural and sports events, etc. However, in most cases, this profit goes either to dividends or to improve and develop the business.

The protocol of the participants of the enterprise serves as an authorization document for postings on the distribution of profit. In addition, entries can be made on the basis of the provisions of the charter, if they determine the directions for the use of net profit and establish deduction standards. Any other expenses bypassing the will of the owners of the enterprise (including the so-called expenses that do not reduce taxable income) cannot be written off from the account of retained earnings/loss.

Distribution of profits is carried out at the annual meeting of participants. If the company distributes net profit for 2013, then the postings are made in 2014, when a meeting of participants (shareholders) is held.

Retained earnings: balance sheet and postings

So, retained earnings in the balance sheet is an active-passive account. It forms undistributed (by nature - net, that is, received after taxation) profit or uncovered loss. The debit of account 84 reduces the equity capital of the enterprise, the credit balance, respectively, increases. The right to dispose of the net profit belongs to the owners of the enterprise. Of all the other components of equity capital, profit is the freest to use, since the list of directions for its spending is open. However, it must be remembered that this does not give grounds for the enterprise to freely, bypassing the will of shareholders (participants), spend it on purposes not provided for by the charter and other documents of the enterprise.

In analytical accounting, separate sub-accounts should be opened for account 84, including "Accrual of dividends", "Deductions to reserve capital", "Revaluation of fixed assets", etc. It is also rational that separate sub-accounts take into account profit (loss) of the reporting year and undistributed last year's profit. In addition, on account 84 (since the Chart of Accounts does not provide for a separate balance sheet account), various funds created from net profit at the initiative of the enterprise can be taken into account: a special fund for the corporatization of employees, a development fund, etc.

Retained earnings as a source of production development

Of great interest is the fact that the Ministry of Finance recommends, within the framework of analytical accounting separately reflect the part of net profit that is directed to the development of the enterprise. As you know, the acquisition of fixed assets is made at the expense of property (cash), and there are no mandatory entries to indicate the source. This entry does not lead to a decrease in retained earnings and the size of the net assets of the enterprise. An enterprise can easily prove that fixed assets were acquired solely from profit and not otherwise. It can also be identified on the basis of an analysis of the balance sheet structure. In this analysis, it is assumed that investments are made primarily from net income, secondly from long-term loans, and thirdly from other accounts payable.

The best location of profit on the balance sheet

It is more profitable for an enterprise to keep its own capital in net profit, and not in the authorized one, or Profit can promptly recover losses, replenish the authorized capital, if it is increased by law minimum size, increase other funds in equity. The higher the size of retained earnings, the further the company is from the threat of bankruptcy, and the more optimistic its prospects are.

84 account in the hands of the chief accountant

In conclusion, it should be noted that the retained earnings account is entirely in the hands of the chief accountant. Yes, no one, except the members of the company, can dispose of the property of the company, but only the chief accountant depends on the calculation of the profit of the organization, the correctness of accrual certain amounts and double entry on accounting accounts. Only the chief accountant can tell the company's participants how to act correctly in a given situation, where and what amounts of retained earnings to direct.

Retained earnings are the portion of a company's income that is not paid out to shareholders as dividends. This money is usually reinvested in the development of the company or used by it to pay off debts. Usually, retained earnings for a given reporting period are determined by subtracting from net income company paid dividends to shareholders. Accountants do the calculation of retained earnings (and this is an important part of their job), but by knowing the basic principles, you can do it yourself!

Steps

What is retained earnings

Find out where the company's retained earnings are recorded. Actually, this is the account that is displayed in the company's balance sheet under the heading "Shareholder's share in the company's funds." The funds held in this account are the total profit of the company since its inception, which has not been distributed among shareholders in the form of dividends. If this account goes negative, this situation is called "accumulated deficit".

• Knowing the retained earnings accumulated by the enterprise since its incorporation allows determining the balance of retained earnings after the next reporting period. For example, if the cumulative retained earnings of your company is 12 million rubles, and during the current reporting period you deposit 6 million rubles into this account, then the new amount of accumulated retained earnings will be 18 million rubles. In the next period, if retained earnings amount to 15 million rubles, given account will be already 33 million rubles. In other words, since the inception of the company, you have been able to do enough that, after paying wages, operating expenses, dividends to shareholders, another 33 million rubles are left “saved” for the company.

1. Try to understand the relationship between a company's retained earnings and the policies of its investors. On the one hand, investors in a profitable company expect a good return on their investment. On the other hand, they are interested in the development of the company, because in this case it will bring more profit, which means that their dividends will increase. For a company to grow and develop, it must invest its retained earnings in itself, increasing its efficiency and/or expanding its business. If successful, such reinvestment in long term will lead to an increase in the profitability of the company and the price of its shares, that is, investors will earn more money than if they initially demanded large dividends.

2. You need to know what factors affect the amount of retained earnings. Retained earnings may vary from one accounting period to another, but this is not always the result of changes in the company's earnings. The following are factors that can affect the balance of retained earnings:

   • Change in net profit
   • Change in the amount of cash paid as dividends to investors
   • Change in cost of goods sold
   • Change in administrative costs
   • Change in taxes
   • Changing the company's business strategy

Calculation of retained earnings of a company

1. Gather the required data from the company's financial statements. Companies are required to formally document their financial history. As a rule, the easiest way to calculate current retained earnings is not manually, but using these official data on retained earnings accumulated to date, net income and dividends paid. The capital of the company and its retained earnings up to the last entry period should be shown in current balance, while net income is shown in the current income statement.

   • If you can get all of this information, all you have to do is calculate retained earnings using the formula: Net Income - Dividends Paid = Retained Earnings.
     • To find a company's cumulative retained earnings, add the current period's retained earnings to the amount in the account at the end of the last reporting period.
   • For example: let's say that at the end of 2011 your company had 150 million rubles of total retained earnings in its account. In 2012, the company earned RUB 15 million in net profit and paid out RUB 5.5 million in dividends. In this case:
     • 15 - 5.5 \u003d 9.5 - retained earnings for this reporting period
     • 150 + 9.5 = 159.5 - total retained earnings

2. If you do not have access to information about net income, you can calculate retained earnings manually, although this process is more laborious. Start by looking for the company's gross margin. Gross profit is shown in the multi-step income statement. It is determined by subtracting the cost of goods sold by the company from the income received from these sales.

   • Suppose that a company earned 1,500,000 rubles from sales during one quarter, but it had to spend 900,000 rubles on the purchase of goods necessary to form 1,500,000 rubles. Gross profit for this quarter was 1,500,000 - 900,000 = 600,000.

3. Calculate operating income. This is the company's income after covering all sales and operating (current) expenses such as wages. To calculate this figure, subtract all operating expenses (other than cost of goods sold) from gross profit.

   • Let's assume that having gross profit 600,000 rubles, the company spent 150,000 rubles on Administrative expenses and wages employees. The operating income of the company for this quarter is 600,000 - 150,000 = 450,000 rubles.

4. Calculate net income before taxes. To do this, subtract the cost of interest, depreciation and amortization. Depreciation and amortization, that is, the decrease in the value of assets (tangible and intangible) during their useful life, is recognized as an expense in the income statement. If a company buys equipment with a 10-year service life for 100 thousand rubles, annual expenses for depreciation will amount to 10,000 rubles, based on the assumption that the equipment depreciates at a constant rate.

   • Suppose our company lost $12,000 in interest expenses and $40,000 in depreciation expenses. Net income before taxes in this case would be 450,000 - 12,000 - 40,000 = 398,000.

5. Calculate net income after taxes. Taxes are the last expense we need to consider. To do this, first apply tax rate company to its net income before taxes (by multiplying them), and then subtract the resulting amount from the company's net income before taxes.

   • Let's assume that in our example the company is taxed at a flat rate of 34%. Our tax expenses will be 0.34 × 398,000 = 135320.
   • Net income after tax: 398,000 - 135,320 = 262,680.

6. And finally, subtract the dividends paid out. As a result of all previous manipulations, we calculated the company's net profit, taking into account all expenses. To determine retained earnings for the current period, it is necessary to deduct the dividends paid to shareholders from net income after taxes.

   • Let's assume that in our example we paid out 100 thousand rubles to our investors this quarter. Retained earnings for the current period amounted to 262,680 - 100,000 = 162,680.

Joint stock, other companies and other organizations the amount not covered in the manner prescribed by law from their own sources.

Uncovered loss is determined taking into account payments to the budget and other expenses repaid from the account, and shows the amount of uncovered loss as of the reporting date, regardless of the time of its formation.

Losses can result from:

• excess of expenses over income from financial and economic activities and non-operating transactions;
• detection in the reporting year material errors previous years;
• changes .

Reasons for receiving an uncovered loss:

• receiving an actual negative from the company's activities due to the excess of costs over income;
• influenced financial condition company changes in accounting policies;
• errors found in the current year, made in previous years, which affected the financial result.

In accounting, an uncovered loss is reflected in a separate account “Retained earnings (uncovered loss)” (see), is recorded on its debit, and the amounts used to cover the loss are credited. The debit balance on the account can be shown either in the asset of the balance sheet (its currency increases by this amount), or in the liability of the balance with a decrease by the amount of the uncovered loss of the balance sheet currency.

Losses (both past years and the current year) can be covered by (the fund) and targeted contributions from the owners of the company. If there are not enough available sources to cover the uncovered loss of the reporting year, the uncovered loss is left in the balance sheet. If the organization does not have sources to pay off losses, then the founders of the company may decide to cover them at the expense of additional contributions.

The write-off from the balance sheet of the loss of the reporting year is reflected in the credit of the account "Retained earnings (uncovered loss)" in correspondence with the accounts: "Authorized capital" - when the value of the authorized capital is brought to the value of the organization's net assets; "Reserve capital" - when directing the funds of the reserve capital to pay off the loss; “Settlements with founders” - when paying off the loss of a simple partnership at the expense of targeted contributions from its participants, etc.

According to the account "Retained earnings (uncovered loss)" is organized in such a way as to ensure the formation of information on the areas of use of funds.

Uncovered loss - the final financial result obtained based on the results of the organization's activities for the reporting year; characterizes the decrease in its capital. Distinguish uncovered loss excluding loss coverage decision wholly or partly at the expense of relevant sources (distribution of loss between participants) and uncovered loss, taking into account the decision to cover the loss(distribution of loss between participants) - the first is shown in as a net loss, the second - in (section "Capital and reserves").